My 2018 returns

I don't do all the calculations, but I can say that recent returns have been ballpark what I expected.  


Those bad loans of a couple of years ago affected my investment massively and I basically got zero return on my 50k investment (all in plus) year before last into last year, I think my timing was just poor (as always).


Now they have disposed of those bad loans it seems to be performing roughly as I would expect again so have turned on re investing and hopefully allow the 5% ish to grow our savings.

Happy new year to all...

Hi aju.  I did ring to ask if my interest could be sent to Holding and the returned capital reinvested.  This is possible on the Investing side but not with the IFISA, apparently.  I'm sending everything to the ISA Holding account for the moment and when I've reached my 2018 profit, I'll withdraw it.  Most ISA schemes will have some mechanism that allows the capital to remain untouched and the interest available for withdrawal.  I have set % limits on the amounts I invest in P2P, Crowdfunding and equities so don't want my ISA to keep rolling up.  I shall use each year's profits to buy more Premium Bonds as I'm below my set % of cash and over in P2P.

I have been using Zopa for maybe 9 years. I have withdrawn nearly all my capital from Plus and ISA ( about £22k) because
I have noticed disappointing sharp increase in     bad debts      over last 8 months. Zopa estimates earnings about 5.1 to  5.4% on my account
for last year. Actual figure was a surprising    1.6%    . Been good in  past years till Safeguard was removed Dec 2017.
Became suspicious in last 6 months as interest earned was barely increasing.

Interestingly you say you wait developments but the fact you have stopped reinvestment will mean you will start to see a reduction over the year in your rates. Zopa states all rates it gives are based on reinvesting. This will be correct only if rates stay stable of course. The way the loans on Zopa and RS and probably most others work is a bit like a regular saver account at a bank in that the real rate over the loan period is as stated but the true rate if you only ever made one loan is less than this on year on year basis. If you don't reinvest returns then assuming no defaults your real return will be just above 50% after the loan is completed.

I know a lot of people will say that this is not correct and in fact the loan rate is really 5% say but unless the returned capital is reinvested it will NOT be making any interest and so the real interest rate will actually be shy of 2.8% depending on how long it runs - of course. Just something to think about I feel. I may be wrong here and it may just be semantics but at the end of the year the rates will show this to be correct in my experience.

The other problem with running down the account is that unless you sell off the loans then you are not actually protecting yourself from defaults that are coming down the line. I will say that both myself and Mrs Aju have been moving ISA's across over the last year or so into Zopa nad as many people will know from many of my posts we have been putting them max £10 loans to try and mitigate the Zopa 1% diversification 0- our rates are 0.3%, this has meant we have many more loans than the amounts that most people putting in the sums we have contributed could get. This has seriously increased our defaulted loans but, and it's a big but we have been hit quite bad numbers wise but nothing worse that 60% on any given month by value of interest received. There have been a few of them but we are still up overall.

One further thing I would say is that we have only ever had 20% max in plus at any given point in time and to be honest we should probably reduce that to 10% but the fat lady is still singing on that one.

So having bolstered up our ISA side we have stopped reinvesting into ISA from invest, in my case it was a tax thing in Mrs aju at present she doesn't pay tax, and we are dabbling in the better rates on RS at the present. Still in a very small way but have got loans at 5.9-6.3% over the last 2 months whilst we experiment. Also we both £100 sweetener offers on the £1000 each invested that will be 10% so lets hope the world holds up long enough to take receipt on that after a year. (Mrs aju got a £50 bonus as well for inviting me into the game on RS as well.) Money for old rope if RS doesn't take a dive and the PF fails ...

Using XIRR for 2018 my account and Mrs B received 1.56% and 1.53% respectively. Give that this includes a 0.5% early adopter bonus, and the one off recovery in November for sold bad debt - which will possibly reduce future recoveries - not a great return.

I'm about 50% plus, 40% core, 10% classic. 
Mrs B 45% plus, 55% core.
We have both withdrawn about 30% of the capital over the year and reinvesting everything else into core.

Our blended forecasts from Zopa are 4.0% and 4.5% after bad debt.

So they are nowhere near their forecast.

    

This is my rolling 52-week XIRR from beginning of 2017 to date aggregate ISA/Standard). From February 2017 to to April 2018 I ramped up the account monthly by nearly 400%, all of it in Plus. The pickup early on reflects the honeymoon period where enhanced Plus repayments are coming in with defaults yet to materialise. The peak 6.25% was early Sep 17, since which things have gone pear shaped. The step up from a low of 2.5% reflects the debt sale receipts followed by a decent December, but January to date has been awful (91% of interest lost)

Yes, January's ISA figures are looking as if they'll be my worst ever month since June 2017.  Earnings £132, defaults £100. Four days to go though, so here's hoping.  I do find the % of income actually received each month as a useful and quick-to-calculate figure which gives a snapshot of what's happening in my portfolio. As I say in my first post, it was 72% last year.